Tuesday, August 09, 2011

Santelli's Still With Us

Rick Santelli, "Father of the Tea Party", weighs in on the so-called "Tea Party Downgrade" -- which I'll call the Obamanomics Downgrade.

Apparently, the Dems are hanging their hats on this bit of the S&P report. this is what the other guy in the video clip is talking about when he says S&P said it's about Republicans and "raising revenues".
Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act…
I wonder who works at S&P and what their agenda is?  Because if you ask me, this sounds like Democrats talking.   And here's why I say this.  To Democrats:

Rasing Revenues = Raising Taxes = Raising Revenues

With them, its that reflexive.

Now .... "taxes" haven't gone down in any meaningful way during this recession.  But revenues have.  Given the above, that's counterintuitive.  What gives?
Govt Revenue = f(Tax Rate,Private Sector Revenue)

In general, it is a product.   However, even Obama admitted during the debates that there is a negative feedback factor as your tax rate goes up.   But in the same breath he said he doesn't care if it means sticking it to the guys he thinks it should be stuck to.

When the economy tanks, private sector revenue goes down, ergo government revenue goes down.  When the tax rate goes up, private sector revenue goes down, so the net change isn't necessarily positive.  But holding the tax rate the same, and increasing Private Sector Revenue (which can only be achieved by economic growth), you get more government revenue, and it has further been shown that if taxes have been raised too high, lowering them some will result in more economic growth -- and that has been shown in the past to yield more government revenue ... at a lower tax rate.

Democrats are always willing to see that raising taxes can theoretically, if people do not change their economic behavior in response, raise revenues.   They refuse to see that it often does not.

Combine that with the fact that we have one of the highest corporate tax rates on the planet, and take a wild guess what is likely to happen if we raise them even more?

Republicans know that theoretically if you raise taxes and if people do not change their economic behavior in response, you might raise revenues. They also know that people not responding by changing their economic behavior is about as likely as a snowball passing intact through a jet engine. They can also show that you can lower taxes and still raise revenues.  And they also know that our Republican government was founded on the ideal of limited government, and that bigger, more expensive, more oppressive (taxing) government is antithetical to that ideal.

It's really pretty simple, and I've said it and so have others over and over and over.  We have a spending problem.   We spend way way way way more than we take in.  And every time we agree to let the government "take in" more to "balance the budget", ole Lucy pulls the football away again and they spend that AND more.  And more and more and more. 

Our credit rating should have been downgraded over a year ago, maybe longer ago.  It wasn't.  What the Tea Party is saying is that we know that if we give you more, you will spend it and more.  And the Republicans held the "ceiling deadline" as a bargaining chip no more than the Democrats did.  Hell, Boehner had a plan out there on the table that included $800 billion in "revenue increases" a week or so before the deadline.  That sounds like compromise to me.  But what happened?

President "Almost God" demanded another $400 billion.

And Boehner rightly said "you and the horse you rode in on, bub!"

Democrats always want more, and they'll call it anything in the world to get it.  And if you don't give it to them, you're the one who didn't compromise. 

If it means Congress will start taking the debt seriously from now on, I am glad we were downgraded, because absent that, our real credit risk, no matter what company said what about it, would continue to slide off the cliff.


tim said...

“And the Republicans held the "ceiling deadline" as a bargaining chip no more than the Democrats did.”

Absolutly! Nicely put. I got so sick of the talking heads and news casters (On Fox no less) go on and on each passing day during the debate holding the Republican position in the same manner as the Tax & Spenders. “Well, both side need to…”, “Both sides of the isle…” Freakin’ BS! Using their idiot logic if the cops have to extract some lunatic from his house because he’s threatened to blow up the neighborhood, exactly whose fault is it? Both of them? Brilliant. Congratulations on appearing Fair & Balanced but a big fat F for not understanding our country is going down the tubes by spending, spending, spending. Not because we don’t tax enough.

Serenity now!!!

Cylar said...

I'm already tired of the "raising revenue" euphemism being deployed, when what they really mean is raising taxes.

Government does not decide to "raise revenue." It decides to raise taxes. It sets taxes at certain rates for certain groups, and then revenue rises or falls or stays the same. (Unfortunately, as you said, simply raising taxes does not work predictablly as the sun rising, as far as revenue goes.)

It's like saying you've decided to get a job, simply by sending out a resume and/or attending a job interview. No...what you've decided is to try to get a job by maximizing the factors under your control. There are other people involved whose behavior and decisions actually indicate the final outcome of whether you get the job...or at what amounts the revenue actually comes in.

The Left is nothing if not arrogant and presumptive.